Among the factors contributing to the inability of environmental and economic interest groups to resolve conflicts are the processes of social perception and social decision making. This article identifies social psychological dynamics that cause opposing parties to misunderstand each other’s interests and the facts presented to support them, thus hindering efficient conflict settlement. The authors review research elucidating the sources of these problems and potential remedies. They discuss how such dynamics arise within the contexts of procedures for settling environmental conflicts, governmental adjudication procedures, and alternative free-market-based procedures. The conclusion is that purely market-based procedures avoid the obstacles most endemic to governmental adjudication but exacerbate other problems. The authors conclude by analyzing emerging hybrid procedures that avoid the greatest obstacles associated with purely adjudicatory and purely market-based procedures. Conflicts between environmental interests—cleaning the atmosphere of carbon emissions, saving the rainforest ecosystem, protecting fisheries from extinction—and related economic interests have become increasingly pronounced. These environmental and economic issues affect virtually all members of a society; hence, much is at stake in resolving these conflicts. In keeping with the analysis of environmental dilemmas as mixed-motive conflicts (Hoffman et al., 1999), we believe that many opportunities exist for mutually beneficial trade-offs between environmental and economic interests. However, these “efficient” solutions to environmental dilemmas are often missed in practice. We focus on the role of social psychological obstacles—tendencies in social perception and decision making that impede negotiators ’ progress toward efficient solutions. We first describe these dynamics in the abstract by reviewing research that elucidates underlying psychological mechanisms and potential remedies. Then, we describe how these dynamics arise within the contexts of th
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